People have to move for a lot of different reasons. They can vary from up-sizing, downsizing, or maybe you just got a great new job. Whatever the reason is, you find yourself in need of a new house. For most people their home is the most expensive, and complicated, purchase they will make over the course of their entire lives.
So, where do you start?
The traditional logic has always been to call a Real Estate agent first but is that really the right first step? After all, the first questions a real estate agent will inevitably ask are “What is your price range?” and “Do you have a PRE-APPROVAL from your preferred lender?”
So, would it not make more sense to call a lender first? We think so!
The first step in your home buying process should be getting pre-approved. This will give you an idea of what you can afford, and what steps you can take to maximize your purchasing power. Having your Pre-Approval in hand, before you start looking for houses, also gives you the ability to pounce when a house you like comes on the market. This is a necessity in our current, incredibly competitive housing market (and our handy dandy pre-approval app gives even more flexibility in this area, but more on that later).
There are 5 simple steps to the Pre-Approval process, and they can be completed in as quickly as 30 min. The speed depends mostly on the complexity of the buyer’s income stream, this in turn affects how it needs to be documented and reviewed.
Here is a quick breakdown of what you can expect:
1. Initial Loan Consultation
Even though the initial loan consultation is optional, and you can jump right into completing the loan application, I highly recommend taking this important step.
It gives the Mortgage Loan Officer (MLO) and the borrower an opportunity to get to know each other a little, and help the MLO understand the specifics of their situation. We get a better idea of their goals/wants/ needs, a chance to explain the current market trends related to interest rates, and helps to set the expectation for both parties.
Armed with this information the MLO can tailor the loan options to the borrower(s) unique needs and make sure that they are educated about the specifics of the recommended loan programs. Consultations usually take place over the phone, during a 20 min call, but can also be done in person.
2. Loan Application
Our loan applications can be taken and completed during the initial loan consultation, either over the phone or in person. For those who would prefer to fill out an application electronically, they may do so via our secure online portal.
The goal of the application is for an MLO to obtain the borrower’s personal information as well as a clear picture of their financial profile, most importantly their income, credit, assets, and collateral. We always advise that first time home buyers complete the application together with their MLO, so they can answer any questions or address any concerns as they come up.
3. Documentation Request
Once the application has been taken or received electronically, the MLO will send out a documentation request based on the borrower’s specifics. This request will include items related to their income, credit, and assets. Our borrowers have the option to submit their documentation via our encrypted and secure upload site, send it in via FedEx, certified mail, or drop it off at our office location. (Sample List - Document Requirements)
4. Mortgage Loan Originator/Loan Officer Review
Once the documentation has been uploaded or received, the MLO will review it, and make sure the information on the application correlates with the documentation. If the MLO has any questions or concerns, they will work with the borrower(s) to address those questions. Once all the particulars are worked out and the borrower’s file is complete, the MLO will review the loan options in detail with the borrower(s). Additionally, they will go over the rate & terms of eligible loan programs, as well as the payment details via a Loan Estimate.
5. Issue the pre-approval
Once the MLO has finished a full review of the borrower(s) scenario, and has presented the borrower with a loan estimate, they will issue the pre-approval via our pre-approval app (Learn about our free app ). Our pre-approval app allows the borrower and their Realtor® to request their pre-approval anywhere and on demand, run various loan scenarios, receive real time updates on the status of their loan (through push notification, text message, or emailed status updates), and even submit outstanding documents through the app.
Now, you are all set! You know how much you are qualified for, you understand the process, and what your lender can do for you. Time to go out and find that dream home!